Connor Jensen

Connor Jensen (Raymond James) asked Select Water Solutions for clarification on the water infrastructure project timing slippage from Q4 2025 into 2026, and its potential impact on the 20-25% growth outlook. He also inquired about the stronger outlook for water services, specifically if the water transfer outperformance is expected to continue.

Answer

EVP and COO Michael Skarke (Select Water Solutions) attributed the minor project slippage to right-of-way delays, which have since been resolved, keeping execution on track for H1 2026. EVP and CFO Chris George explained that the stronger water services outlook was driven by a significant uplift in New Mexico water transfer in Q4 2025, which supported customer schedule changes and infrastructure build-out. He anticipates continued stability and growth from water transfer, integrated into long-term contracts, providing a steady run rate for the segment through 2026 following 2025 rationalization efforts.

Connor Jensen asked for clarification on the project timing slippage in water infrastructure from Q4 2025 into 2026, and its potential impact on the projected 20-25% growth for 2026. He also inquired about factors contributing to the stronger outlook for water services and whether the water transfer outperformance is expected to continue.

Answer

EVP and COO Michael Skarke attributed the project slippage to minor right-of-way delays, which have since been resolved, positioning the company well for execution in H1 2026. EVP and CFO Chris George explained that the water services segment saw a strong uplift in New Mexico water transfer in Q4 2025 (over 70% growth) due to supporting infrastructure build-out timelines. He anticipates continued stability and growth from water transfer, particularly in the Delaware Basin, integrated into long-term contracts, and expects the H2 2025 run rate for water services to continue through 2026.

Connor Jensen asked for a high-level overview of the 2026 robotics outlook compared to 2025. He also inquired about the success of chemical treatment for Thunderhawk and whether benefits are expected in 2026 without further intervention.

Answer

Scotty Sparks, Executive VP and COO, expects 2026 robotics to be at least on par with 2025, if not better, citing strong trenching seasons in the Mediterranean, North Sea, and Taiwan, robust site clearance, and better rates on large contracts. Owen Kratz, President, CEO, and Director, noted positive developments with Thunderhawk's chemical treatment, questioning the need for intervention, and anticipates the field being back online by some point in Q1 2026.

Connor Jensen requested a high-level overview of the 2026 robotics outlook compared to 2025. He also asked for an update on the chemical treatment success for Thunder Hawk and whether benefits are expected in 2026 without intervention.

Answer

Scotty Sparks, Executive VP and COO, expects 2026 robotics to be strong, at least on par with 2025, with robust trenching seasons in the Mediterranean, North Sea, and Taiwan, and a strong site clearance market, anticipating better rates for large contracts. Owen Kratz, President, CEO, and Director, noted positive developments regarding Thunder Hawk's chemical treatment, questioning the need for intervention, and expects the field to be back online by Q1 2026.

Connor Jensen of Raymond James questioned the reason for the decline in total fleet horsepower while rented horsepower increased, asking about divestments or retirements. He also asked if the company was actively pursuing opportunities in gassier basins to meet LNG demand or focusing primarily on the Permian.

Answer

CEO Justin Jacobs clarified that the change in total horsepower was due to an ongoing review and retirement or sale of some small and medium horsepower equipment. Regarding basin strategy, Jacobs stated that NGS is looking at new opportunities in all basins where it operates and noted that 'green shoots' in gassier basins are creating incremental demand for both small and large horsepower units.

Connor Jensen from Raymond James asked for an update on sold or retired equipment given the slight dip in average horsepower and questioned if the lower G&A expense was a sustainable result of the shared services integration with Energy Transfer.

Answer

Christopher Paulsen, VP, CFO & Treasurer, stated there were no material equipment sales and that active horsepower is expected to hit a new record in Q4. Regarding G&A, he noted it's too early to forecast precisely but the company anticipates about $5 million in annualized savings for 2026 from the shared services model, highlighting early benefits in IT and procurement.

Connor Jensen asked for an update on equipment that was sold or retired during the quarter and questioned if the notable decrease in G&A expenses was a direct result of the shared services agreement with Energy Transfer and if this lower level is sustainable.

Answer

Chief Financial Officer Christopher Paulsen confirmed there were no material equipment sales and expects active horsepower to increase significantly in Q4. Regarding G&A, Paulsen stated that while it's early in the shared services integration, they anticipate about $5 million in annualized savings for 2026. He cautioned against extrapolating from a single quarter but noted immediate benefits in IT and centralized procurement.

Connor Jensen from Raymond James asked about the modest asset sales and retirements during the quarter and how investors should think about this trend for the remainder of the year.

Answer

Christopher Paulsen, Chief Financial Officer, explained that the asset sales are part of the company's ongoing strategy to optimize its portfolio. He confirmed that USAC will continue to look for opportunities to improve overall fleet efficiency through modest sales, asset swaps, or dispositions of units that have been idle for extended periods.

Connor Jensen of Raymond James noted the strong performance of the Ultera drilling products business and asked about its key growth drivers, including international market share gains and offshore prospects. He also inquired about cost-saving measures being implemented in the softer market.

Answer

President & CEO William Hendricks explained that Ultera tends to gain share in softer markets as customers focus on efficiency, and highlighted growth opportunities in the Middle East, North Africa, and offshore markets. EVP & CFO Andrew Smith added that cost controls include headcount reductions, facility consolidations, and a major ERP system conversion designed to improve long-term efficiency.

Connor Jensen noted that the company's rig count was trending above its flat Q2 guidance and asked for visibility on potential idled rigs. He also requested more detail on cost control initiatives within the completions business.

Answer

CEO William Hendricks confirmed they have line of sight on a 'small number' of rigs that could be idled but reiterated the overall expectation for a 'relatively steady' quarter with the potential for slight softening. Regarding costs, he explained that the completions team continues to realize synergies from last year's integration, which is improving the cost structure, supported by the segment's high-performance technology offering.

Connor Jensen asked for examples of remaining synergy opportunities from the NexTier and Ulterra integrations and for color on what is driving Ulterra's outperformance in the current market.

Answer

CEO William Hendricks identified further integration of services like Wireline and NexMile logistics as remaining opportunities. Regarding Ulterra, he credited their 'excellent job' of gaining share in a declining U.S. market and highlighted significant growth potential internationally, where their presence is still expanding.

Connor Jensen of Raymond James asked about the specific cost-side initiatives that have helped drive compression margins higher, beyond just price increases. He also inquired about how the new Permian training center is expected to alleviate labor market challenges.

Answer

CEO Mickey McKee highlighted the use of AI and machine learning for condition-based maintenance, which extends service cycles. CFO John Griggs added that fleet high-grading, such as exiting the Gas Tech business and selling non-core assets, and investments in workforce training have also been key drivers. Mr. McKee further explained the training center is a critical investment to accelerate employee development, which will improve margins and overall business success.

Connor Jensen of Raymond James, on behalf of Jim Rollyson, inquired about the full-year 2025 margin outlook given the cautious second-half commentary and asked about the recent dip in the international revenue mix.

Answer

CFO Rodney Reed detailed the second-half outlook, projecting modest consolidated revenue growth of 1-2% from the first half, with EBITDA margins expected to be flattish due to macro uncertainty and tariffs. President and COO Jose Bayardo explained the international revenue dip was seasonal and reiterated that international markets are expected to be more resilient than North America, which is now projected to see a double-digit activity decline.